Barbarians At The Gate: Investigations At The ITC And .

Barbarians at the Gate:Investigations at the ITC andTrials in the Eastern District of VirginiaThe Pauline NewmanIP American Inn of CourtApril 23, 2014

Dramatis Personae:Dr. Goldberg!Endless Energy!Globalcorp!Rube Goldberg Foundation (“Rube Goldberg Machine”)!Adobes Systems, Inc. (“ColdFusion”)!Cold Fusion Gelato

The Story So Far:

Options SettleGo on the OffensePrepare for Defense

Declaratory Judgment

Declaratory JudgmentDeclaratory Judgment is discretionary bydistrict court, not an automaticjurisdictional grant. Requires Art. III “caseor controversy” standing requirement &federal subject matter jurisdiction.!Dunn Computer Corp. v. Loudcloud Inc., 133 F. Supp. 2d 823 (E.D. Va. 2001)(discussing Skelly Oil Co. v. Phillips Petroleum Co., 339 U.S. 667, 671-72 (1950);Jeffrey Banks, Ltd. v. Jos. A. Bank Clothiers, Inc., 619 F.Supp. 998, 1001 (D. Md.1985))

Test for case or controversyTwo-prong test for trademark cases:1) objectively real and reasonableapprehension of litigation2) course of conduct which broughtplaintiff into adversarial conflict withdeclaratory defendant.!Windsurfing Int’l Inc. v. AMF Inc., 828 F.2d 755, 757, 4 U.S.P.Q. 2d 1052 (Fed.Cir. 1987)

E.D. Virginia Speaks:Dunn Comp. Corp. v. LoudcloudInc.133 F. Supp. 2d 823, 57 U.S.P.Q.2d 1626 (2001)

E.D. Va. speaks:Dunn Computer“One cease and desist letter doesnot a case or controversy makewhere . . . that letter invitesnegotiation, but does not explicitlythreaten litigation, and wasdefendant’s sole act directed atplaintiff. . . . more is required.”

Dunn Computer example criteria Cease and desist letter threatens litigation and setsforth prima facie case of trademark infringement Cease and desist letter coupled with USPTOopposition filed by defendant against plaintiff’s mark Defendant consents to suit by filing infringementcounterclaim Cease and desist letter followed by failed attempts tonegotiate Cease and desist letter coupled with ongoinglitigation between parties.

Application of Dunn ComputerAdobes Demand Letter:!“ASI is also the owner of U.S. Trademark Reg. No. 5,431,224 for COLD FUSIONwhich issued on December 6, 2007 . . . This registration is valid, subsisting and servesas prima facie evidence of the validity of ASI’s exclusive right to the mark . . .”!“[Y]ou have announced plans to manufacture and sell a personalized nickel-hydrogenfusion reactor to be called RUBE GOLDBERG’S COLD FUSION MACHINE. Thisproposed name would appropriate the entirety of our client’s valuable mark . . . any useof RUBE GOLDBERG’S COLD FUSION MACHINE is likely to lead to confusion, asit will suggest that ASI is selling, endorsing, or sponsoring your product.”!“You are hereby on notice that any use of this mark would constitute trademarkinfringement under Section 32(1) of the Lanham Act, 15 U.S.C. § 1114(1), falsedesignation of origin and unfair competition . . . dilution . . . as well as a violation ofrelated state laws.”

Application of Dunn ComputerStanding for Declaratory Judgment may be granted in view of “a cease-and-desistletter threatening litigation and setting forth the elements of a prima facie claim oftrademark infringement against the declaratory judgment plaintiff”. Dunn Comp.at 827 (citing Chesebrough-Pond's, Inc. v. Faberge, Inc., 666 F.2d 393, 396-97 (9thCir.1982).!Here, we see Adobe specifically asserting a prima facie case of trademarkinfringement (owner of valid mark & claim of likely confusion) and other specificfederal claims, and so meets first Dunn Comp. criterion.!This is not an invitation to negotiate, it is an ultimatum. “We demand writtenconfirmation from you within two weeks from the date of this letter that you willpermanently discontinue any use of, or plans to use, the mark RUBEGOLDBERG’S COLD FUSION MACHINE or any other mark that is similar toour client’s COLD FUSION mark, and expressly abandon any trademarkapplication for registration of the mark that you may have sought.”

Application of Dunn ComputerRube Goldberg Foundation Demand Letter:!“The Foundation owns U.S. Registration Number 5793195 for the markRUBE GOLDBERG MACHINE.”!“[Y]ou plan to manufacture and sell a personalized nickel-hydrogen fusionreactor to be called RUBE GOLDBERG’S COLD FUSION MACHINE.Use of this name would infringe our rights under German and U.S. law.”!“As you can see, our registration covers ‘nuclear reactors’ among otherthings. Thus, we own the earlier right to use this mark for these goods andyour use is prohibited.”!“Please send us written confirmation within two weeks that you will not usethe name RUBE GOLDBERG in connection with your device or business.”

Application of Dunn ComputerContrast with Adobes letter:!No allegation of specific claims under Lanham Act or “prima facie” magic words,just vague allegation that use would infringe the Foundation’s rights.!No allegation of likeliness of confusion, merely claim that use is “prohibited”.!No specific threat of litigation, just a request not to use the name RUBEGOLDBERG.!So unlike the Adobes letter, the Foundation letter fails the first Dunn Computercriterion, and as a whole seems more like an invitation to negotiation, not a threat thatputs Dr. Goldberg in reasonable application of imminent litigation.!Note that while this letter by itself likely would not be sufficient to present standingfor Declaratory Judgment, the Foundation’s trademark opposition is another DunnComputer factor that would likely allow standing.

Application of Dunn ComputerCold Fusion Gelato Demand Letter!“We are hopeful that we can work thisout without having to get lawyersinvolved, but we are prepared to to takethat step if necessary.”!

Other claimsTrademark misuse? No. Whilethat may be a defense, it is not acause of action itself. A complaintalleging trademark misuse will bedismissed as unripe. DunnComputer at 830-831.

Preparing for Defense To consider:Who is actually likely to followthrough with their Cease and Desistletters? Do any of these letters looklike the work of shake-down artists?If we are sued, is this worth litigating,or should we settle?

Preparing for DefenseRegardless of whether we file a DJaction, we must still preserve anydocuments that might be relevant inlitigating the trademark issues.This includes data such as back-uptapes.

Hitting the Ground Running Legal team: lead counsel and local counselExperts: review all relevant informationIn-house team: executives ready to addressany issuesData: all documents reviewed and readyCash: ability to pay all expenses (includinge-discovery)Prognostication: preparing for potentialclaims made by an opponent.

Welcome to the Rocket DocketEntrance to Albert V. BryanFederal Courthouse(C) 2012 Tim Evanson, used under terms of CreativeCommons licenseJudge Walter E.Hoffman(1907-1996)

Welcome to the Rocket DocketThe Eastern District is traditionallythe fastest of the Union — fastest tosettlement and fastest to trial

Rocket Docket: “typical” timelinein Alexandria Division T 0: complaint filed T 8 days: service of complaint (must be within 120 days) T 29 days: (within 1 month): Defendant files responsive pleading T 59 days (within 2 months, as little as several days): Initial order;discovery begins T 73 days (2 months): R. 26(f) conference to discuss discovery planincluding proposed protective order T 80 days (within 3 months): proposed discovery plan must be filed, dueone week before: T 87 days (within 3 months) (Wednesday Morning): Rule 16(B)conference held with Magistrate judge; default time to set discoverydeadlines T 7 months: discovery completed (Friday before third Thursday of month) T 8 months: Trial

Trials and Tribulations In theory, faster cases are less expensive,and so only the best claims and defensesare brought.Parties must assume case is going to trialfrom the start, since there is not enoughtime after good-faith negotiations fail toprepare.Continuances are more than disfavored(see Local Rules 7(G), (I))

How do they do it? Magistrates handle discovery motions,heard almost every Friday, within aweek of filing. District Judges handle dispositivemotions, heard within about two weeksof filing. Decisions are made normally the daythe motion is argued.

Sleeping on Your RightsIf a party fails to prosecute ordefend timely, he will not later beheard to complain or ask for acontinuance.

Confidentiality & Privilege The Court may, upon request, grant a party leaveto file a document or a portion thereof under seal,but blanket sealing orders will not likely beentertained.! Documents protected by the Attorney-ClientPrivilege or Work Product Doctrine will not likelyneed be produced, but care should be taken topreserve any protection, including an early starton a privilege log.

Playing rouletteMost cases filed in the Eastern District will be assignedto the Division in which they were filed, includingnearly all trademark cases.!BUT — patent cases are assigned randomly to one ofthe four divisions (Alexandria, Newport News, Norfolk,or Richmond) regardless of where the case is filed.!Potentially, you could file a patent case in Alexandriabut drive six hours to a discovery motion every week.

Pleasant Surprise: ProductiveMediationThe Court may ask the parties toparticipate in (free!) settlementdiscussions with a magistrate judgeexperienced in mediation.

References U.S. Const. Art. III Sec. 2Skelly Oil Co. v. Phillips Petroleum Co., 339 U.S. 667 (1950)Windsurfing Int’l Inc. v. AMF Inc., 828 F.2d 755 (Fed. Cir. 1987)Chesebrough-Pond’s, Inc. v. Faberge, Inc., 666 F.2d 393 (9th Cir. 1982)Dunn Computer Corp. v. Loudcloud, Inc., 132 F. Supp. 2d 823 (E.D. Va.2001)Jeffrey Banks, Ltd. v. Jos. A. Bank Clothiers, Inc., 619 F.Supp. 998, 1001(D.Md.1985)Fed. R. Civ. P. 4, 16, 26E.D. Va. R. 5, 7, 16, 26R.M. Tata & W.C. McGraw, “What Litigators Must Know aboutVirginia’s Rocket Docket”, Law360, March 18, 2013DiMuroGinsburg PC, “The Rocket Docket: U.S. District Court for theEastern District of Virginia (Including Local Procedures for PatentInfringement/Invalidity Cases)”, Online, May 16, 2012

Barbarians at the Gate: Investigations at the ITC and Trials in the Eastern District of Virginia The Pauline Newman IP American Inn of Court April 23, 2014